GREEN, MARRIAGE OFRespondent’s Petition for ReviewCal.June 26, 2012$203561 “ LIU,J. IN THE SUPREME COURT OF THE STATE OF CALIFORNIA IN RE THE MARRIAGEOF JULIE R. GREEN and TIMOTHY P. GREEN JULIE R. GREEN, SUPREME COURT FILED Petitioner/Appellant, JUN 26 2012 Frederick K. Ohlrich Clerk VS. TIMOTHY P. GREEN, Respondent/Respondent. PETITION FOR REVIEW On Appealfrom the Contra Costa County Superior Court, Case no. DR 41290, Hon. Charles B. Burch, Presiding, following a May 16, 2012 Opinion ofthe First District Court ofAppeal, Division Four, in Case no. A129436 Robert A. Roth, Esq., SBN 113201 TARKINGTON, O’NEILL, BARRACK & CHONG 2711 Alcatraz Avenue, Suite 3 , Berkeley, CA 94705-2726 (510) 704-0921 Attorneys for TIMOTHY P. GREEN TABLE OF CONTENTS TABLE OF AUTHORITIES00... eecccecceeeeeceeeeeeeeeeesneeeeeeeeeeeneeeeseeaes li I. QUESTIONS PRESENTED FOR REVIEW |...cece IL. INTRODUCTION ooo. ecccceteeeceneeeeeseneeeeseneeenseesneesetesenseeaes 2 IIL. PROCEDURAL HISTORY AND STATEMENTOF THE FACTS......cceccecccecesceeeeeeeseseeeeeeneeens 5 IV. LEGAL DISCUSSION0cceceeceeeenneeeenaeeneecesneeeenneeeaes 1] V. CONCLUSION0iecceccecceceneeeneeeeeeeeeneeeeneeeeceeesereeeaeeesareeaes 15 VIL. CERTIFICATE OF WORD COUNT 0.0...eeeeeteeee 15 EXHIBIT A: APPELLATE OPINION EXHIBIT B: ORDER DENYING REHEARING AND MODIFYING OPINION TABLE OF AUTHORITIES Cases In re Marriage ofBrown (1976) 15 Cal.3d 838 w..ccccceescsseeeeneeeees 12 In re Marriage ofFithian (1974) 10 Cal. 3d 592 ooo.eeeseees 12 In re Marriage ofHillerman (1980) 109 Cal. App. 3d 334 ww... 13 In re Marriage ofLehman (1998) 18 Cal.4th 169, 187.00... 12 In re Marriage ofSonne (2010) 48 48 Cal.4th 118... 8, 9 Constitutions and Statutes California Code of Regulations,tit. 2, section 575.1. 0... 3,6, 7 California Rules of Court, rule 8.500(bD)(1) 0.0... ceeeeeeeceeeeeeees 5, 11, 14 CalPERS (May 2012) Facts at a Glance: General, p. 1...eee4 CalPERS (July 2011) Vested Rights of CalPERS Membersp. 13... 13 Education Codesections 22805 - 22806 .......ccccccccccesccescseeeteeeeeeeesseens 4 Government Codesection 9356.21 .....ccccccccccccctecsetteteetseeseensaes Leeeases 4 Government Code section 2050800... cccceccsccseeseeesteeeeeteetteesssaeensees 6 Government Code section 20178 ...0..cccccccescectssesseeeeseesesetsesssesensessaes 8 Government Codesection 21020-21030 wo...feeeeneertenseneeeeene 2,4 Government Code section 21024, subd. (a) 0.0... ccccescceceeseesceeseeenseees 6 Government Code section 21024, subd.(e).........Leceeeeseeceeseesseeeeeseaeeees 6 in Government Code section 21025 ooiiiecciccccccccccceccceteeceeececcesecccessnsenrenens 6 Government Code section 210340... .ceecceecccccseeecseeesseeeeceesseeesseeeas 12 Government Codesection 21050, subd.(a) wc.ccceeceeeeeees 3,6, 13 Government Code section 314791300... eecccccceeeceeseeseeetsseesseeesteesnseens 4 Government Code section 7503 1.5.0... cccccesesceeesssecessceseseeeseceesseeserees 4 Senate Public Employment & Retirement Committee Comments on AB 2840 (2000) wo... cccccessscceesssseessseeeesseneesaes 2 il I. QUESTIONS PRESENTED FOR REVIEW Under what circumstances, if any, does the marital community have an interest in valuable pension credits that a married public employeeis eligible for because of premarital public service, but which the employee- spouse purchases,or is eligible to purchase, during marriage? Under whatcircumstances,if any, does the marital community have an interest in valuable pension credits that a married CalPERS employeeis eligible for because of premarital public service, but which the employee- spouse purchases,or is eligible to purchase, during marriage? Y. INTRODUCTION The California Public Employees Retirement System (CalPERS) allows membersto purchase retirement system credits based on their pre-employment ‘public service’ activities. (See Government Codesections 21020-20130.) “Over the years, CalPERS members havebeen authorized to purchase 27 different types of service credit, using 10 different costing methods.” (Senate Public Employment & Retirement Committee, Comments on AB 2840 (2000); quoted and reproduced in the October 7, 2011 Amicus Brief filed by the Northern California Chapter of the American Academy of Matrimonial Lawyers (‘AmicusBrief’) at pp. 2, Appendix p.1.) While public service credits must be ‘purchased,’ the price charged is frequently far less than the value of the resulting retirement benefits. (See AmicusBrief, p. 8.) This case poses important questions regarding the marital community’s interest, if any, in an employee- spouse’s opportunity to purchase valuable service credits that are based on premarital public service. Here, the employee-spouse purchased public service pension credits based on his pre-marital, life-imperiling military service. Such credits may be purchased in a lump sum (utilizing either community or separate property funds), or through payroll! deductions (community property salary if done during marriage, and separate property earnings thereafter). (Government Code section 21050, subd. (a); Cal. Code Regs., tit. 2, § 575.1.) Here, Husband paid for the service credits by installment deductions from his marital employment earnings. After full briefing on appeal, having difficulty analyzing the community property implications of this transaction, Division Four of the First District Court of Appeal sua sponte solicited an amicus brief from the Northern California Chapter of the American Academy of Matrimonial Lawyers, which was followed by responsivebriefs from the parties. The Academy could not reach consensus on the proper analysis, and presented two opposing viewpoints. (See Opinionp. 3 [attached hereto as ‘Exhibit A]; Amicus Brief p. 1.) The Court of Appeal’s published Opinion, issued on May 16, 2012, found this appeal to presentissues of first impression. (Opinionp. 1.) The ramifications of this case are wide-ranging, extending far beyond the over one million employees covered by the CalPERS system. (See CalPERS (May 2012) Facts at a Glance: General, p.1. calpers.ca.gov/eip-docs/about/facts/general.pdf.) Many other public retirement systems allow employeesto obtain additional retirement system credits based on prior military service, or for other approved forms of ‘public service.’ (See, e.g., Education Code sections 22805- 22806 [State Teachers’ Retirement System]; Government Code sections 9356.21 [Legislators’ Retirement Law]; 31479.3 [County Employees Retirement Law]; 75031.5 [Judicial Retirement Law].) Under the CalPERSsystem, public service pension credits may be purchasednotjust for the military service, as is at issue here, but also for such diverse pre-employmentactivities as: periods when the member waslaid off from public employment; time spent as a prisoner of war or recovering from war wounds; workingin a judicial or legislative fellowship; services for AmeriCorps, CETA-sponsored employers, the National Guard, or the Merchant Marine; and a variety of other circumstances. (See Opinion at p. 5 fn. 3; Government Code sections 21020-20130.) Moreover, as pointed out by the AmicusBriefin this matter, the analysis of public service credits under CalPERS could affect rights under private sector ERISA plans, as well: ... this case could have implications far beyond the treatment of service credit purchases made under CalPERS,sinceit is not unheard offor a private- industry-defined benefit plan to grant additional service credit for pre-participation or even pre-plan service. (Amicus Briefp. 38.) The implications of this case are broad, and posea risk of burdensomeproceduresand unfair results, absent this Court’s guidance. This Court should grant review to further its goals of addressing important issues of law, and promoting clarity and fairness in the lower courts. (California Rules of Court, rule 8.500 (b)(1).) WI. PROCEDURAL HISTORY & STATEMENT OF THE FACTS Timothy Green (‘Husband’) served in the U.S. Air Force from July 23, 1982 to May 1, 1986. (AA 112, 143; RT 3.) On June 16, 1989, Husband washired asa firefighter for the Dougherty Regional Fire Authority (DRFA’), in Dublin, California. (AA 143; RT 3.) DRFA was a public agency memberof the California Public Employees’ Retirement System (‘CalPERS’). Like many other CalPERS memberagencies, DRFA had contracted with CalPERSto offer employees the option to purchase up to four years of retirement service credits on account of prior military service. (AA 143; RT 3; Govt. Code § 21024, subds. (a) and (e).) The purchase could be made, at Husband’s election, in either a lump sum orin installments (which can only be made by payroll deduction). (Government Code section 21050, subd. (a); Cal. Code Regs., tit. 2, § 575.1.) On July 1, 1997, DRFA merged with the Alameda County Fire Department. This did not affect Husband’s military service credit option, as the Alameda County Fire Department had contracted for the same benefit. (AA 143; RT 3; Govt. Code §§ 20508, 21025.) Husband married Julie Green (‘Wife’) on May 16, 1992. Over ten years later, on August 1, 2002, Husband exercised his nght to purchase four years of CalPERSservice credits on accountofhis premarital military service. Husband had beeneligible to exercise this option for more than 13 years. He arranged to make the purchase through bi-monthly payroll deductions of $92.44 over a 15 year (180 month) period,in a total amount of $33,278.40. There is no evidence in the record suggesting that Husband had any separate property resources available with which to fund a lump sum servicecredit purchase. Husband’slast installment paymentfor the military service credit purchase is scheduled for July 20, 2017. (AA 143; RT 3; Cal. Code Regs., tit. 2, § 575.1.) The parties separated on October 1, 2007. At that time, the community had made 62 of the 180 monthly installment payments, in an amounttotaling $11,462.56. (AA 143-144.) Similarly to Husband, Wife also served in the military prior to marriage, and worked during marriage for a CalPERS employer offering the option to purchase military service credits. Husband and Wife had discussed which oftheir military service credits to purchase, before deciding to purchase Husband’sonly during the marriage. (RT 10-11.) On March 12, 2008, Wife filed a petition for dissolution of her marriage to Husband. (AA 1.) Following various preliminary proceedings, the matter cameto trial in April 2010, before the Hon. Charles B. Burch. (AA 149.) Asto the division of military service credits in Husband’s CalPERSretirement account, the parties submitted pre-trial briefs and a Stipulation to uncontroverted facts. (AA 112-131, 143-144; RT 3.) The superior court relied largely on this Court’s decision in /n re Marriage ofSonne, in deciding how to divide Husband’s military service credits. (RT 28-34, 40-43; In re Marriage ofSonne (2010) 48 Cal.4th 118.) The military service credits were awarded to Husband as his sole property; with Wife to be reimbursed for half the installment payments made during marriage(i.e. $5,737.28), plus interest at the six percentinterest rate that CalPERS pays employees for refunded contributions. Including accumulated interest, Husband was ordered to pay Wife $6,699.54. (AA 144, 156; RT 40-43; Gov. Code § 20178.) Wife also received half of the service credits in Husband’s CalPERSretirement account for the years of the marriage. Wife was awarded her own CalPERSpension in the division of community property. As she was employed by a CalPERSagency, she thus had right from that time forward to purchase military service credits for that pension. (AA 156; RT 10-11.) A Judgment implementing the ruling was entered on June 28, 2010. (AA 149.) Wife filed notice of appeal from that Judgment on August 18, 2010. (AA 172.) On August 24, 2011, after the filing of the Appellant’s Opening Brief, Respondent’s Brief, and Appellant’s Reply Brief, the First District Court of Appeal, Division Four, sua sponte requestedthat the Northern California Chapter of the American Academy of Matrimonial Lawyers (‘the Academy’) submit an Amicus Brief addressing a variety of specified questions. The parties were given leave to, and in fact did,file additional briefs responsive to the Amicus Brief. The Amicus Brief was filed on October 7, 2011. The Academy wasunable to reach a consensus regarding the proper method for allocating separate property and community property interests in the purchased military service credits, and submitted two opposing analyses of the case. Argument A, written by Barbara DiFranza, concludedthat the purchased credits were separate property. Argument B, written by Ann Fallon, concludedthat the purchased credits were community property. (See AmicusBriefp.1; Opinion at p. 3. See also Sonne, supra, 48 Cal.4th at 121-122, 127 [finding DiFranza analysis helpful].) The Amicus Brief also reflected input from attorney Diana Richmond; and from James M. Crawford, an expert on private ERISA pensions, whosuggested that the case outcome could have significant implications for private industry defined benefit pension plans. (AmicusBrief 1, 11 fn. 3, 38.) On May 16, 2012, the First District Court of Appeal, Division Four, issued its decision in an Opinion designated for publication. The First District took a different analytical approach than any ofthe alternate Amicus approaches. The lynchpin of the First District’s analysis was its conclusion that because, by statute, CalPERS agencies can elect to stop offering members the option to purchase public service credits, that purchase right is not vested but rather is a mere “expectancy”until such time as the employee has contracted for the purchase. The court determined that Husband’s premarital military service did not create a separate property interest in the associated retirement credits, because they were not purchased until he was married. (Opinion atpp. 5, 8-11, 13.) The Court of Appeal remanded the case without guidanceas to whether the time rule or some other apportionment method should be 10 used, and suggested that the trial court consider additional evidence, without clarifying whether actuarial appraisals were necessary. (Opinion at pp. 16-19.) On June 1, 2012, Husbandfiled a timely Petition for Rehearing. On June 6, 2012, the First District issued an Order modifying and correcting its Opinion, deleting and replacing three paragraphs, but denied Husband’s rehearing request and left the disposition unchanged. (Exhibit B.) Husband nowseeksrelief from this Court through his timely Petition for Review. IV. LEGAL DISCUSSION The valuable public service credits at issue here are a common feature of numerous public retirement plans, and raise substantial questions affecting the property rights of a large number of California families. As noted in the Amicus Brief, the principles decided here may also impact analysis of property rights to private defined benefit retirement plans, as well. (AmicusBrief p. 38.) The case presents important questionsoffirst impression that are a proper subject for this Court’s review. (California Rules of Court, rule 8.500 (b)(1).) I The appeal raises serious questions regarding whether according no weight whatsoeverto the life-imperiling premarital military service upon whichthe credits are explicitly based confers a disproportionate benefit on the community that is not “fairly representative ofthe relative contributions of the community and separate estates.” Un re Marriage ofLehman (1998) 18 Cal.4th 169, 187.) Also at issue, where as here the employee spouse wassingle whenhestarted working for the CalPERS employer, is the effect of Government Codesection 21034, which provides that purchased service credits are to be credited “as it would be credited if the memberhadbeenin state service during his or her public service.” The First District’s conclusion that because an employer may change whatbenefits it offers, public service credits are mere expectancies and not contingent vested rights, appears to be a significant modification or departure from prior holdings characterizing retirement benefit rights. (Opinion at p. 9; Lehman, supra, 18 Cal. 4th at 183-184; In re Marriage ofBrown (1976) 15 Cal.3d 838, 842 fn. 2, 846 fn. 8; In re Marriage ofFithian (1974) 10 Cal. 3d 592, 602 fn.14 & accompanying text; In re Marriage of 12 Hillerman (1980) 109 Cal. App. 3d 334, 340. See also CalPERS, Vested Rights of CalPERS Members (July 2011) p. 13 [see calpers.ca.gov/eip-docs/about/press/news/Vvested-rights.pdf].) The daunting issues raised in this appeal will not go away by merely depublishing the Opinion. Moreover, even if the First District’s analysis is correct, it leaves many unanswered questions which will result in a deluge oflitigation unless this Court’s guidance is provided. The Opinion expressly leaves unanswered whetherthe time rule or some other apportionment method should determine characterization of purchased service credits, and what“additional evidence” can properly be considered to determine apportionment. (Opinion at pp. 16-19.) Likewise, the decision offers no guidance for how its analysis would apply when premarital service credits are purchased during marriage in a lump sum using separate property. (See Resp. Br. 11; Opinion at p. 6 fn. 4; Government Codesection 21050, subd.(a).) The Opinion suggests that treating marital purchase of premarital service credits as separate property might have the unintended consequence ofcreating a claim for a nonemployee 13 spouse if an employee were to purchaseservicecredits for periodsof marital public service after divorce using separate property. (Opinion at p. 15.) However,it fails to provide guidance on whethereligibility for premarital service credits is a community investment opportunity that a spouse has a fiduciary duty to exercise during marriage. Both the lower courts and families across California would benefit from this Court’s guidance on how community contributions toward purchased public service credits based on premarital labor should be treated, and the evidentiary standards to be applied in such cases. By granting review, this Court will further its goals of addressing important issues of law, and promoting more uniformity, clarity and fairness in the lower courts. (California Rules of Court, rule 8.500 (b)(1).) 14 V. CONCLUSION ‘For the reasonsstated herein, petitioner Timothy Green respectfully requests that this Court grant review; upon review, reverse the Court of Appeal’s Opinion; and grant such otherrelief as the Court deems appropriate. Respectfully Submitted, TARKINGTON, O’NEILL, BARRACK & CHONG Date: June 25, 2012 Lo Fa os Ns wa | t f ‘ , sey /}t.VQ Z Me By: ROBERT A. ROTH Counsel for Timothy Green VI. CERTIFICATION OF WORD COUNT The text of this brief consists of less than 8,400 words, as counted by the word-processing program used to generate thebrief. Date: June 25, 2012 Lid ROBERT A. ROTH 15 EXHIBIT A: APPELLATE OPINION Filed 05/16/12 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION FOUR In re the Marriage ofJULIE R. GREEN and TIMOTHY P. GREEN. JULIE R. GREEN, Appellant, A129436 Vv. (Contra Costa County TIMOTHY P. GREEN, Super. Ct. No. D0801292) Respondent. In this case of first impression, we consider howto classify four years of credit in the California Public Employees’ Retirement System (CalPERS)that respondent Timothy Green (Timothy) elected to purchase with community funds during his marriage to appellant Julie Green (Julie). Timothy waseligible to purchase the credit because he had performed four years of military service with the United States armed forces prior to the parties’ marriage. (Gov. Code, § 21024.)' Over Julie’s objection, the trial court characterized the military service credit as Timothy’s separate property, and ruled that Julie was entitled only to reimbursement of the community funds used to pay for the service credit, plus interest. We conclude that, because the military service credit was purchased with community funds during the parties’ marriage, it was community property. We remandto the trial court to determine the correct allocation of the credit. ' All further statutory references are to the Government Code unless otherwisespecified. I. FACTUAL AND PROCEDURAL BACKGROUND Timothy served in the United States Air Force for four years (from July 23, 1982 to May 1, 1986). On June 16, 1989, he began working asa firefighter for the Dougherty Regional Fire Authority in Dublin. The fire authority was a participant in CalPERS. Julie and Timothy were married in May 1992. In July 1997, the Dougherty Regional Fire Authority merged with the Alameda County Fire Department, whichalso is a participant in CalPERS. Timothy continued to work for the Alameda County Fire Department. On August 1, 2002, Timothy exercised his right to buy service credit for his military service. The purchase was made pursuantto section 21024, which permits a CalPERS memberto obtain up to four years of service credit for service with the United States armed forces. Timothy elected to pay for the purchase throughan installmentplan, paying $92.44 twice each month through payroll deductions for 15 years (scheduled to continue until July 2017). Before the parties separated on October 1, 2007, community funds in the amount of $11,462.56 were used toward the purchase of the military service credit. Julie filed a petition for dissolution of marriage in March 2008. During dissolution proceedings, a dispute arose over whetherto characterize Timothy’s military service credit as separate or community property. A court-appointed expert proposed awarding a pro rata share (34.44 percent) of the purchased service credit to Julie, representing the percentage ofpayments toward the military service credit made with community funds. Both parties opposed the expert’s proposal, and they submitted briefs on the issue to the trial court. Julie sought to continue to pay half of the cost of future installment payments, and requested that half of the military service credit be placed into a separate accountfor her benefit through CalPERS. Timothy argued that becausehis right to purchase military service credit arose prior to the parties’ marriage,all four years of credit were his separate property. Timothy acknowledged, however, that community funds used to pay for the purchase before the parties’ separation in October 2007 were community property. A trial was held on the issue, and both parties testified regarding the purchase of the military service credit. The trial court ordered that the military service credit portion of the CalPERSpension in Timothy’s name be awarded to Timothy as his separate property. Timothy was ordered to pay Julie the sum of $6,699.54, representing half of the installment payments made with community funds during the marriage toward the military service credit, plus interest at the rate of six percent. Julie appealed after judgment was entered, challenging only the characterization of the military service credit.’ After appellate briefing was complete, this court on its own motion accorded amicuscuriae status to the American Academy of Matrimonial Lawyers, Northern California Chapter (Academy), and invited the Academyto submit a brief. The Academy accepted the court’s invitation. Because Academy members who discussed the issue were not unanimousin their views as to the appropriate characterization and allocation of the military service credit, the Academy filed a brief containing two sections, one advocating reimbursement with interest, and the other advocating allocation of separate and community property interests in the credit. Timothy and Julie thereafter filed answer briefs. i. DISCUSSION A. Overview ofApplicable Law. “The characterization of property as community or separate determinesits division upon dissolution of marriage. Each spouse ownsa one-half interest in all community property. ([Fam. Code,] § 751.) In general, community property is divided equally in the ? Timothy filed a motion in this court to dismiss the appeal, arguing that Julie had appealed from the judgment, but not two relevant posttrial stipulations and orders, and that she could not appeal because she entered into a stipulated agreementthat benefited her. This court denied the motion. aggregate when the marriage ends. ([Fam. Code,] § 2550; see [Fam. Code,] §§ 2600- 2604.) However, separate property is not subject to a similar division, and belongs only to the owner spouse. ({Fam. Code,] § 752.)” Un re Marriage ofBenson (2005) 36 Cal.4th 1096, 1102.) We review thetrial court’s characterization of military service credit as separate property as a mixed question of law and fact that is predominately one of law, subject to de novo review. Un re Marriage ofSonne (2010) 48 Cal.4th 118, 124 (Sonne).) Any analysis of the division ofpension rights must be guided by our Supreme Court’s seminal case, In re Marriage ofBrown (1976) 15 Cal.3d 838 (Brown), which held that “the community ownsall pension rights attributable to employment during the marriage.” (/d. at p. 844.) Brown concluded that pension rights, whetheror not vested, represent a property interest, and to the extent that such rights derive from employment during marriage, they comprise a community asset subject to division in a dissolution proceeding. (/d. at p. 842.) The court defined a “vested” pension right as one that “is not subject to a condition of forfeiture if the employmentrelationship terminates before retirement.” (/bid.) An employee can hold a “vested” but “immature” pension right, such as when the right to paymentis subject to the condition that the employee survive until retirement. (/bid.) Nonvested pension rights, by contrast, are contractual rights subject to a contingency or contingencies (usually, that an employee continue to work for his or her employer). (/d. at p. 846.) At issue in Brown were the nonvested pension rights of husband, who accumulated retirement “points” pursuant to a plan under which he would forfeit his pension rights if he was discharged before he accumulated a threshold numberofpoints. (Brown, supra, 15 Cal.3d at pp. 842-843.) The court distinguished such nonvested rights from a mere “expectancy,” whichis not a property right divisible upon dissolution of marriage. (/d. at pp. 844-845.) An “expectancy”is “the interest of a person who merely foresees that he might receive a future beneficence, such as the interest of an heir apparent [citations], or of a beneficiary designated by a living insured whohas rightto change the beneficiary [citations].” (/d. at p. 845, fn. omitted.) “[T]he defining characteristic of an expectancyis that its holder has no enforceable right to his beneficence.” (/bid., original italics.) The Supreme Court concludedthat the nonvested property rights in Brown were more than a mere expectancy: “Since pension benefits represent a form of deferred compensation for services rendered [citation], the employee’s right to such benefits is a contractual right, derived from the terms of the employment contract.” (/bid.) “[NJonvested pension rights are not an expectancy but a contingent interest in property.” (/d. at p. 841.) B. Processfor Purchasing Military Service Credit. Many public employees in California enjoy the benefit of membership in CalPERS. “Members of CalPERS, once vested, participate in a defined benefit retirement plan, which supplies a monthly retirement allowance under a formula comprising factors such as final compensation, service credit (i.e., the credited years of employment), and a per-service-year multiplier. The retirement allowance consists of an annuity (which is funded by member contributions deducted from the member’s paycheckand interest thereon) and a pension (whichis funded by employer contributions and which must be sufficient, when added to the annuity, to satisfy the amount specified in the benefit formula). (Gov. Code, §§ 21350, 21362.2, subd. (a), 21363.1, subd.(a).)” (Sonne, supra, 48 Cal.4th at p. 121, italics omitted.) Section 21024 permits a CalPERS memberto obtain up to four years of service credit for service with the United States armedforces.’ Before the statute was amended in 2000, it provided that, in order to obtain such credit, the member must “contribute an amount equal to the contributions for current and prior service that the employee and his or her employer would have made with respect to him or her had he or she been in membership for a period equal to the military service and assuming that the employer's * The statute is one of several that expandsthe definition of“ ‘[p]ublic service,’ ” and provides CalPERS membersthe option to purchase service credit based on activities outside their employmentfor a CalPERS participant. (§ 21020 et seq.; e.g., §§ 21022 [service credit for time when memberwaslaid off], 21023.5 [service credit for time in Peace Corps or AmeriCorps], 21029.5 [service credit for time in California National Guard].) rate in effect at the time of election and his or her compensation at the beginning ofhis or her first period of service in membership with the employer underthis section had been in effect for the period.” (Stats. 1995, ch. 379, § 2.) In other words, whereas employers and employees generally both pay contributions to a member’s CalPERSplanfor credit earned during employment (Sonne, supra, 48 Cal.4th at p. 121), a member was required to pay both the employer and employee amounts for military service credit purchased pursuant to section 21024. Sections 21050 through 21054 were enacted in 2000, to standardize the method for purchasing military service credit and other forms of credit based on service performedoutside the CalPERS system. (Stats. 2000, ch. 489, § 18.) Section 21050 governs the method ofpayment for service credit.* Section 21052 governs the calculation of the contribution, and provides in relevant part that “[a] member. . . who elects to receive service credit subject to this section shall contribute, in accordance with Section 21050, an amount equalto the increase in employerliability, using the payrate and other factors affecting liability on the date of the request for costing of the service credit. The methodologyfor calculating the amount of the contribution shall be determined by the chief actuary and approved by the board.” (Stats. 2000, ch. 489, § 18.) At the same time that the forgoing statutes were enacted, section 21024 was amendedto provide that any memberelecting to receive credit for military service shall do so pursuant to sections 21050 and 21052. (Stats. 2000, ch. 489; § 13.) Members, such as Timothy, who requested costing of service credit between January 1, 2001, and December 31, 2003, had the option of making contributions pursuant to sections 21050 and 21052, or to make the paymentcalculated under section 21024 as it read before the statute was amended. (33C West’s Ann. Gov. Code (2002 Supp.) p. 126.) * Asoriginally enacted, section 21050 provided that a memberelecting to purchase credit must do so by lump-sum payment, or in installment payments in accordance with governing regulations. (Stats. 2000, ch. 489, § 18.) The statute has since been amended to add various provisions regarding installment payments. (Stats. 2003, ch. 855, § 6; Stats. 2010, ch. 197, § 1.) As for how contributions worked in this case, Timothytestified below that his fire department “elect[ed] to offer us certain add-ons and when my employeroffers the military add-on, PERStakesa little bit more, that rate they pay each year.” He further testified that his employer “ha[d] been contributing to allow members to buy military [service credit] since they first gave us that option. So my employer has been contributing their portion of it into the PERS system for many years.” In its amicusbrief, the Academyclaimsthat this testimony misrepresented that Timothy’s employer paid for a portion of his military service credit. The author acknowledges that Timothy was probably referring to the cost his employer paid to elect to be subject to section 21024, as opposed to paymentfor his particular military service credit. (See § 21024, subd. (f) [statute authorizing purchase of military service credit applies only if contracting agency elects to be subject to it].) Timothy confirmsin his answerbrief that this was what he meant, which is consistent with his testimony below that the employer contribution was “not an individual thing,” meaning that his employer paid to enable its employees to purchase military service credit (§ 21024, subd. (f)), but not that his employer paid to purchase any individual employee’s military service credit. It is thus undisputed that Timothy was responsible for the entire cost to purchase the military service credit. Asfor the benefit that Timothy obtained by electing to purchase military service credit, section 21051, subdivision (a)(1) provides that a memberelecting to purchase service pays contributions that he or she would have madeto the system for the period during which military service was performed, at a rate of contribution underhis or her employer’s formula at the rate age that applied when the employee washired, and that the employee’s compensation earnable on that date applies to the memberduring the period for which credit is granted. Before the statute was amended in 2000, section 21024 provided that a purchase of military service credit was based on the rate in effect at the time of election, and as well as on the compensation at the time of hire. (Former § 21024, Stats 1995, ch. 379, § 2.) The rate that a CalPERS memberis paid on retirement, however, takes into account an employee’s final compensation. (§§ 21353- 21354.5.) Thus, whatever method was used to set Timothy’s contribution to purchase military service credit, he was able to purchaseit based onhis salary at the time of hire, but he will receive paymentfor the service credit based on his salary upon retirement.” C. Community Property Interest in Military Service Credit. Julie argues that the trial court erred in characterizing Timothy’s military service credit as separate property, and we agree. Asset forth above, in determining whether the community has an interest in pension rights, courts look to when a party acquired a property interest in them, such that the pension rights were more than a mere “expectancy.” (Brown, supra, 15 Cal.3d at pp. 841, 844-845.) Here, there is no dispute that Timothy completed his military service before his marriage to Julie. There can also be no dispute that CalPERS members whohadserved in the military, and whose employers elected to be subject to section 21024, were eligible to purchase military service credit at the time that Timothy servedin the military.° However, at the timethat Timothy left the military, he had no property interest whatsoever in the CalPERS retirement plan, because he did not begin working for a CalPERSparticipant until three years later, when he began to work as a firefighter in 1989. > After the Academyfiled its amicus brief, Timothy filed an unopposed request for judicial notice of excerpts from the CalPERS annual reports for the years 1988-1989 and 2008-2009. He claimsthat the reports “help explain the nature of the employer subsidy to the military service credits,” because they show therate in effect at the time he was hired, as well as at the time of trial. We deny Timothy’s request. “Reviewing courts generally do not take judicial notice of evidence not presented to the trial court. Rather, normally ‘when reviewing the correctness ofa trial court’s judgment, an appellate court will consider only matters which were part of the record at the time the judgment was entered.” [Citation.]” (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.) Timothy does not direct us to any exceptional circumstances that would justify departing from this rule. ([bid.) Nor does he direct this court to evidence indicating the specific rate upon which his contribution was actually calculated, so it is unclear that the annualreports are even relevant. ° Section 21024 was enacted in 1995. (Stats. 1995, ch. 379, § 2.) However, it was derived from formersection 20930.3, which was enacted in 1974. (Stats. 1974, ch. 1437, § 1; Historical and Statutory Notes, 33C West’s Ann. Gov. Code (2003 ed.) foll. § 21024, p. 456.) Even after Timothy started working for a CalPERSparticipant, and thus became eligible to purchase military service credit based on his premarital service in the military, his right to such credit amounted to no more than an “expectancy,” whichis not a property right divisible upon dissolution of marriage. (Brown, supra, 15 Cal.3d at pp. 844-845.) Section 21024, subdivision (e) specifically provides that the statute “shall apply to a memberonly if he or she elects to receive credit while he or sheis in state service in the employment of one employer on orafter the date of the employer’s election to be subject to this section.” (Italics added.) In other words, a member’sright to purchasecredit is dependent onhis or her employer’s election to be subject to section 21024. Although Timothy’s employer apparently had been offering its employees the opportunity to purchase military service credit “for many years,”it is unclear whenit first elected to be subject to the statute. Presumably the employer could elect at some point to no longer be subject to section 21024, in which case employees whohadserved in the military would have no right to purchase credit based on that service, let alone a property interest in CalPERScredit based on that service. Timothy characterizes his right to purchase military service credit as a 2 39“ “nonvested pension right{],’ which was a “contingent retirementinterest” that was “subject to conditions that [we]re wholly within [his] control.” He relies on cases that stress that a contractual retirement benefit “ ‘matures’ when the employee has an unconditional right to payment, i.e., all the ‘conditions precedent to the paymentofthe benefits have taken place or are within the control ofthe employee. (Citations.]’ {Citations.]” (dn re Marriage ofGillmore (1981) 29 Cal.3d 418, 422, fn. 2, italics added; see also In re Marriage ofCastle (1986) 180 Cal.App.3d 206, 214-215 [husband held property right even though contractual right to military retirement benefits contingent on avoiding court martial or dishonorable discharge]; in re Marriage ofPace (1982) 132 Cal.App.3d 548, 551, fn. 3 [pension right “ ‘matured’ ”if all conditions precedentto paymentare within control of employee].) In Gillmore (unlike here), husband held vested and matured retirement benefits, and the only condition to receiving those benefits washis actual retirement, at which point he would be immediately entitled to payment. (Gillmoreat p. 422 & fn. 2.) The Academyauthor advocating reimbursementalso focuses on Timothy’s ability to control a “condition precedent”to “activate” his military service credit. She relies on In re Marriage ofSkaden (1977) 19 Cal.3d 679, which held that “ ‘termination benefits’ ” included in a husband insurance sales agent’s agreement with his employer (entered into during the parties’ marriage) were community property, subject to division upon dissolution. (/d. at p. 682.) Therelevant contract provided that husband wouldreceive certain benefits if he was terminated two years or moreafter the contract’s effective date; the parties werestill married twoyears after husband entered into the contract. (Jd. at pp. 682-683.) The court held that the “ ‘vested’ ” but “ ‘immature’ ”rights in question, which were subject to an agreement, were “not a mere expectancy but a chose in action,” and therefore property subject to division upon dissolution. (/d. at pp. 685-686.) Apparently analogizing the status of the military service credit before Timothy purchased it to the termination benefits in Skaden, the Academyauthor advocating reimbursement notesthat “‘the fact that the payment of benefits, the right to which has vested, is subject to a condition whose fulfillment is wholly within the control of the employee spouse does not affect the vested nature of the right or degradeit into an “expectancy.” ” Cd. at p. 687.) In Skaden, the condition subject to the employee spouse’s control was terminating his employment—oncehedid that, he would automatically receive termination benefits, as set forth in his employment agreement. Here, by contrast, Timothy held no such unconditional, contractualright to the paymentof benefits, or even a nonvestedright to such credit, before he actually purchased military service credit during the parties’ marriage, using community funds. The condition wholly within his control was the right to enter into a contract with CalPERSfor the purchase of military service credit in the first place. Before that point, he did not hold a “contractualright [to the military service credit], derived from the - terms of the employmentcontract.” (Brown, supra, 15 Cal.3d at p. 845, italics added.) 10 Heinstead held no more than an expectancy, because he held “‘no enforceable right” to the service credit. (/bid., original italics.) Thetrial court also mischaracterized Timothy’s abstract ability to purchase military service credit as a property interest whenit relied on Sonne, supra, 48 Cal.4th 118. Sonne involvedthe dissolution of a husband’s second marriage. (/d. at p. 121.) Husband wasa participant in CalPERS,and hetransferred to his first wife her one-half interest in the service credit he earned during their marriage (8.677 years) upon the dissolution ofthat first marriage. (Jbid.) Thefirst wife thereafter exercised her right to a refund of the accumulated contributions to the account, an election that permanently waivedherright to any further claim on the retirement benefits, including any service credit (§§ 21292, subds.(a), (d)). (Sonne at p. 121.) During his marriage to his second wife, husband exercisedhis right to redeposit the contributions pursuant to section 20751, and paid for the redeposit with community funds through monthly payroll deductions. (Sonne at p. 121.) At the time husband andhis second wife separated, the community had redeposited 70.83 percent of the scheduled payments, and the trial court concluded that the community was entitled to 70.83 percent of the service credit based on the redeposited amount. (/bid.) The Supreme Court reversed. The court concluded that because community funds contributed only to the annuity portion of the retirement allowance, the community was entitled only to a pro tanto share of the annuity, and not to a share of the pension component, which had been funded by employer contributions during husband’s first marriage. (Sonne, supra, 48 Cal.4th at pp. 121-122.) Citing section 20756, the court noted that “a redeposit of member contributions for a prior period of service does not constitute consideration for the service credit for that period; it is merely a condition precedentto a credit for that previously rendered service.” (Sonne at p. 125.) Thetrial ° co court’s “apportionmentfailed to consider that the right to the 8.677 years of service credit was Husband’s separate property, which preexisted the Husband-Wife marriage, inasmuchasthe service credit was offered in consideration for that prior 8.677 years of service.” ([bid.) The service credit at issue was earned during husband’s marriage to his {1 first wife, and was notattributable to employment during the second marriage. (/d. at p. 126.) “[T]he community madea redeposit of a portion of Husband’s accumulated contributions (Gov. Code, § 20012) for the period ofthe[first] marriage. Those contributions were converted into an annuity upon Husband’s retirement. The obligation of the employer to contribute to the pension component, on the other hand, derived from Husband’s service duringthe [first] marriage. Accordingly, the community had a claim only on the annuity componentrelating to the time period ofthe[first] marriage, and was entitled only to a pro tanto share of thatportion of Husband’s retirement allowance.” (/d. at pp. 127-128, originalitalics.) The redeposit of membercontributions in Sonneis distinguishable from the purchaseof military service credit in this case. In Sonne, the husband’sright to 8.677 years of service credit was husband’s separate property, because husband had obtained a contractual rightto it during a previous marriage. (Sonne, supra, 48 Cal.4th at p. 125.) The community did not purchase the service credit by redepositing member contributions during husband’s second marriage; instead, the redeposit was merely a “condition precedent”to receiving credit for previously rendered service. (/bid.) In the present case, Timothy held no such contractual property interest in military service credit before he purchased it.’ His payment for the credit was not simply a “condition precedent”to 7 At the hearing regarding the characterization of the military service credit, the trial court focused the fact that, in Sonne, community funds were used only to redeposit the annuity portion of the retirement allowance, whereas the obligation of the employer to contribute to the pension component of husband’s retirement fund derived from the husband’s service during a previous marriage. (Sonne, supra, 48 Cal.4th at pp. 121-122, 127-128.) The court apparently assumedthat the purchase of military service credit worked the same way, and that community funds were used only to purchase the annuity portion of Timothy’s retirement benefits. The court concluded that“as the wife that had half of your community property invested in that buy-back, you [Julie] get one-half of the annuity—the value ofthe annuity. That’s what the case [Sonne] says.” Asset forth above, the statutory scheme governing the purchase of military service credit contemplatesthat the cost of purchasing military service credit pursuant to section 21024 includes payment ofboth the employee and employer cost of the credit. (Ante, § II-B.) 12 obtaining previously earned credit under CalPERS,as it was in Sonne, because unlike in Sonne, Timothy did not previously have a right to such credit. (Cf. ibid.) The Academyauthor advocating reimbursementrelies on Jn re Marriage of Lucero (1981) 118 Cal.App.3d 836 (Lucero), which wascited favorably in Sonne. (Sonne, supra, 48 Cal.4th at p. 125.) In Lucero, husband withdrew retirement contributions from an employerretirement plan during the parties’ marriage. (Luceroat p. 839.) Husband redeposited those fundsafter the parties separated, using his own separate funds. (/bid.) The court characterized the pension rights held before redeposit as Similar to the nonvested pension rights in Brown, because they amountedto “a nonvested pension subject to the single additional contingency of redeposit of retirement contributions previously withdrawn. Both are contingentcontract rights, and thus both should be treated as property subject to division on dissolution of marriage.” (Lucero at p. 843.) Because the right to redeposit contributions wasa pensionright that was attributable to employment during the marriage, husband’s monthly retirement benefit was community property subject to division (after wife reimbursed husbandforhis separate property paymentto reactivate the credit). (/d. at pp. 841-842.) According to the Academy author advocating reimbursement,this case is analogous to Lucero, supra, 118 Cal.App.3d 836, except that community property was used to “activate” service credit owned by Timothy’s separate estate, instead of the other way around (separate property being used to activate community-ownedpensionrights in Lucero). However, the pension rights that were “reactivated” in Lucero clearly were governed bya preexisting contract between the employee husband and his employer, meaningthat they were contingent contract rights, and thus should be treated as property. Here, by contrast, there was no contract governing husband’s military service time before the parties purchased the credit, only a possible expectancy that ifTimothy continued to work for a CalPERSparticipant, and ifsection 21024 remainedin effect, and ifTimothy’s employer continued to offer the option to buy military service credit pursuant to the statute, and ifTimothy paid the requisite amount, he would beentitled to the benefit of the credit he purchased. — 13 In re Marriage ofSpengler (1992) 5 Cal.App.4th 288, upon which Timothyrelies, actually supports a finding that Timothy did not hold a property right to military service credit before he entered into an agreement to purchasethe credit. Spengler held that the right to renew an employer-issued life insurance policy was nota property right, because although the renewalright had potential value, “in the absenceofa right by the insured spouse to enforce that value, the renewalright is not ‘property’ within the meaning ofthe community property laws.” (/d. at p. 299.) Likewise here, although Timothy’s right to purchase military service credit had “potential value,” he had noright to actually enforce that value until he entered into an agreement during the parties’ marriage to purchaseit. ([bid.) Both Timothy and the Academy author who advocates reimbursementalso analogize Timothy’s premarital interest in military service credit to a leasehold right held by husband in In re Marriage ofJoaquin (1987) 193 Cal.App.3d 1529. In Joaquin, husband executed a lease before marriage that included an option to renew, and husband exercised the option to renew the lease during the parties’ marriage. (/d. at pp. 1531- 1532.) The court held that the husband’sexercise of his option to renew the lease “merely extended, or perpetuated,it for an additional five years,” and the exercise ofthe option effected the transfer of a 10-year leasehold, relating back to the date the option was given. (/d. at p. 1534.) As such, the leasehold interest continued to be husband’s sole and separate property. (/bid.) The Academy author advocating reimbursement characterizes husband’s purchase of military service credit as the “exercising [of] an option during marriage”that arose from “premarital sources,” similar to what occurred in Joaquin. This argumentis based on the premise that Timothy’s right to purchase service credit was a property right before marriage, a premise that is far less clear than it was in Joaquin. In that case, the court noted that “an option is an indefeasible right in the optionee to havereal property transferred to him upon his performanceof a condition precedent(i.e., that which is required to exercise the option, manifesting acceptance of the optionor’s offer). [Citation.] Once the optionee exercises the option,he hasa right to specific performanceofthetransfer, relating back to the time the option wasgiven. 14 [Citations.] Thus, the optionee’s title to the property, at least in equity, was acquired at the time the option was originally given.” (d. at pp. 1532-1533.) Here, although Timothy’s military service occurred before marriage, he held no such exercisable “option” until he was eligible to purchase military service credit through his employer. Hehad xo right to purchase military service credit while he was actually on active duty, because he was not an employee of a CalPERSparticipant at that time. There was thus no right to which he “related back,” as husband did in Joaquin when he renewed his lease. Were this court to characterize Timothy’s interest in his military servicecredit as his separate property based onthe factthat his eligibility for credit depended on his premarital military service, this could lead to unintended consequencesin other cases. For example, assuming that the right to military service credit becomesa property right upon the completion of military service, it would logically follow that this right would be characterized as community property if a service memberperformedall of his or her military service while married, then (while still married) began working for a CalPERS participant which provided its employees with the right to purchase credit pursuant to section 21024. If the CalPERS memberdivorced before actually purchasing military service credit, then later purchased credit with separate property after separation, the nonemployee spouse would arguably have a claim to that credit. This would be true even if the military service credit was purchased years after the parties divorced, and after the person eligible for credit had remarried. In characterizing pension rights as separate or community property, “whatis determinative is the single concrete fact of time. To the extent—andonly to the extent— that an employee spouse accruesa right to property during marriage before separation, the property in question is a community asset.” (Un re Marriage ofLehman (1998) 18 Cal.4th 169, 183 (Lehman).) Once a spouse “has accrueda right to retirement benefits, at least in part, during marriage before separation, the retirement benefits themselves are stamped a community asset from then on.” (/bid.) Where a retirement benefit is payable pursuant to a contract entered into during parties’ marriage before 15 separation,it is a community asset. (In re Marriage ofDrapeau (2001) 93 Cal.App.4th 1086, 1093.) “For property characterization purposes, the critical question is when the right to [a] stream of income accrued.” (In re Marriage ofRossin (2009) 172 Cal.App.4th 725, 736, original italics.) Here, the military service credit was indisputably purchased during the marriage with community funds. We agree with Julie that because the contractual right to receive four additional years of retirement credit based on premarital military service was obtained during the marriage, it was “stamped a community asset from then on” (Lehman, supra, 18 Cal.4th at p. 183), notwithstanding the fact that the credit was based on service that predated the marriage.® (Brown, supra, 15 Cal.3d at p. 842; Inre Marriage ofDrapeau, supra, 93 Cal.App.4th at p. 1093; In re Marriage ofBenson, supra, 36 Cal.4th at p. 1103 [presumption under Family Code that retirementplan acquired during marriage is community property].) We therefore reverse the judgment. D. Allocation ofMilitary Service Credit. Having, concludedthatthe trial court erred in characterizing Timothy’s military service credit as his own separate property, the question remains how to allocate the credit. Julie argues thatsheis entitled to half of it (two years), to be placed in a separate ® Although we are aware of no California cases analyzing this issue, we note that courts in at least two other states have cometo the same conclusion with respect to retirement plan service credit purchased during marriage based on military service prior to marriage. (Lodrigue v. Lodrigue (La.App. 2002) 817 So.2d 466, 470 [purchase occurring during existence of community based on service predating marriage is community property, based on presumption that property acquired with communityfundsis considered community property]; Mahaffey and Mahaffey (Or.App. 1989) 773 P.2d 806, 808 [credit acquired during marriageis a marital asset].) By contrast, a New York appellate court concluded that, because the characterization of a pension benefit is determined by the time period in which the credit was earned, military service credit purchased during a marriage based onservice before the marriage was separate property. (Valachovicv. Valachovic (N.Y.App.Div. 2004) 9 A.D.3d 659, 660.) An Ohio appellate court (reviewing the issue as a factual one, under a deferential “weight of the evidence” standard of review) concluded that because the evidence in a dissolution proceeding established that military service accrued before marriage, the service credit purchased — was separate property. (Okos v. Okos (Ohio App. 2000) 739 N.E.2d 368, 373.) 16 account pursuant to section 21294. (§ 21290 et seq.; Fam. Code, § 2610, subd.(a) [trial court shall make whatever orders are necessary or appropriate to ensure each party receives full community property share in any retirement plan].) However, this is inappropriate in light of the fact that installment payments for purchase ofthe credit will continue for several years. This meansthat, although Timothy entered into an irrevocable contract to purchase the four years of service credit using community funds during the parties’ marriage, community funds were used to makeonly a portion ofthe necessary payments, calculated by the court-appointed expert below as34.44 percent (124 out of the total 360 required payments for the service credit). The Academy author who advocates apportionment of the separate and community property interests” argues that employing the “time rule” here would be appropriate, and analogizes this case to Lehman, supra, 18 Cal.4th 169. In Lehman, husbandstarted to accrue a right to retirement benefits two years after the parties married, whenhebeganto participate in the retirement plan offered by Pacific Gas and Electric Company (PG&E). (Ud. at pp. 174-175.) The couple separated in 1977, and obtained a final judgment of dissolution in 1979. (/d. at p. 175.) Fourteen yearslater, in 1993, PG&Eoffered an enhancedretirement program, a voluntary program in which husband participated. (/bid.) Under the program, husband wascredited with three putative years of service. (/bid.) Byretiring early, husband received enhanced retirement benefits (based on those three years) of $708.91 per month. (/bid.) The court held that “a nonemployee spouse who owns a community property interest in an employee spouse’s retirement benefits owns a community property interest in the latter’s retirement as enhanced.” (/d. at p. 179.) The court noted, however, that “[t]he fact that a nonemployee ” The author who advocates apportionment arguesthat the right to purchase military service credit was Timothy’s separate property, a position wereject for the reasonsset forth above. The Academy author acknowledges, however, that the military service credit is “a divisible community asset to the extent that the community acquired a benefit under that contract during the marriage.” (See In re Marriage ofBranco (1996) 47 Cal.App.4th 1621, 1623-1624, 1627, 1629 [community entitled to interest in property held separately by wife before marriage, because community contributed toward purchase ofproperty through new loans using community funds].) 17 spouse who owns a community property interest in an employee spouse’s retirement benefits owns a community property interest in the latter’s retirement benefits as enhanced does mot meanthat the enhancementis a community asset in its entirety.” (Ud. at p. 180, originalitalics.) The Lehman court held that it was not an abuse ofdiscretion for the trial court to apportion the retirement benefits between the community property interest of the employee spouse and the nonemployee spouse, and any separate property interest of the employee spouse alone, pursuantto the time rule. (Lehman, supra, 18 Cal.4th at p. 187.) “The use of the time rule is not unreasonable when the ‘amount of the retirement benefits is substantially related to the number of years of service.’ [Citation.] That is the case here. Reflecting Husband’s length of service of 17.39 years during marriage before separation and his length of service of 32.67 years in total, the community property interest in Husband’s retirement benefits as enhanced wasfixed at 53.23 percent and his separate property interest was fixed at 46.77 percent.” (/bid.) The Academyauthor advocating apportionment argues that Lehman may be more on point here than Sonne, becausethe three years of “fictive service” used in the employer’s enhancement formula in Lehman “merely constituted a device that would allow the retirement to be enhanced.” Weconcludethatit is appropriate to remand the case to the trial court for a determination of the proper allocation in the first instance. “The requirementis that the apportionmentofretirement benefits between the separate and community property estates must be reasonable and fairly representative ofthe relative contributions of the community and separate estates. [Citations.] The basis for apportionment, however,is a matter committed to the judicial discretion of the trial court. [Citattons.] The discretion to be exercised is that of the trial court, not a reviewing court. [Citation.]” (/n re Marriage ofPoppe (1979) 97 Cal.App.3d 1, 11.) It may be appropriate for the trial court to consider additional evidence regarding the value of the military service credit, and to 18 hear further argument regarding the best way to divide the property. 0 (E.g., In re Marriage ofSkaden, supra, 19 Cal.3d at pp. 688-689 [becausetrial court incorrectly decided that termination benefits were not community property, lower court did not address questions ofpresent valuation or other issues; case remanded because proper division should be left to sound discretion oftrial court]; Jn re Marriage ofDrapeau, supra, 93 Cal.App.4th at pp. 1095, 1099 [case remandedto trial court to apportion early retirement benefit consistent with appellate opinion, which reversed lower court’s characterization of the benefit]; see also Lehman, supra, 18 Cal.4th at p. 180° [distinguishing characterization and apportionment].) UL. DISPOSITION Timothy’s request for judicial notice is denied. The judgmentis reversed, and the matter is remanded to the trial court for further proceedings consistent with our opinion. Appellant Julie Green shall recover her costs on appeal. ' The Academy author advocating reimbursementstates that it may be appropriate to ask Julie whether she wants reimbursement, rather than waiting until Timothyretires to see how muchhershare of the service credit may be worth atthat time, an option that may be considered on remand. 19 Sepulveda, J.* Weconcur: Ruvolo, P. J. Rivera, J. * Retired Associate Justice of the Court of Appeal, First Appellate District, Division 4, assigned by the Chief Justice pursuantto article VI, section 6 of the California Constitution. Green v. Green (A129436) 20 Trial Court: Trial Judge: Counsel for Appellant: Counsel for Respondent: Counsel for Amicus Curiae Northern California Chapter of the American Academy of Matrimonial Lawyers, upon the request of the First District Court of Appeal Contra Costa County Superior Court Honorable Charles B. Burch April Rose Sommer Tarkington, O’Neill, Barrack & Chong, Robert A. Roth Whiting, Fallon, Ross & Abel, Ann Fallon; Office of Barbara A. DiFranza, Barbara DiFranza, 21 EXHIBIT B: ORDER DENYING REHEARING AND MODIFYING OPINION Filed 06/06/12 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT Court of Appeal First Aopailats District DIVISION FOUR mipry . JUN —§ 2812 In re the Marnage of JULIE R. GREEN and TIMOTHY P. GREEN. Diana Harber, Clerk A129436 SSSPeper JULIE R. GREEN ° (Contra Costa County Appellant, Super. Ct. No. D0801292) Vv. ORDER DENYING PETITION FOR TIMOTHY P. GREEN, REHEARING AND MODIFYING Respondent. OPINION [NO CHANGEIN JUDGMENT] BY THE COURT The opinion filed May 16, 2012, is modified as follows: 1. On page2, delete the fourth and fifth paragraphs and replace with: Julie filed a petition for dissolution of marriage in March 2008. During dissolution proceedings, a dispute arose over whether to characterize Timothy’s military service credit as separate or community property. The trial court appointed an expert for the purpose of drafting proposed orders to divide the community property interests in the parties’ pension plans. Accordingto a brief filed by Timothy in connection with the dispute over his military service credit, the expert proposed treating 34.44 percent of the service credit as a community property asset, representing the percentage of payments toward the military service credit made with community funds. [{| The parties could not agree on division ofthe military service credit, and submitted briefs on the issue to the trial court. Julie sought to continue to pay half of the cost of future installment payments, and requested that half of the military service credit be placed into a separate account for her benefit through CalPERS. Timothy argued that because his right to purchase military service credit arose prior to the parties’ marriage,all four years of credit were his separate property. Timothy acknowledged, however, that community funds usedto pay for the purchase before the parties’ separation in October 2007 were community property. 2. Onpage9, replace the first paragraph with: Even after Timothy started working for a CalPERS participant, and thus becameeligible to purchase military service credit based on his premarital service in the military, his right to such credit amounted to no more than an “expectancy,” whichis not a property right divisible upon dissolution of marriage. (Brown, supra, 15 Cal.3d at pp. 844-845.) It is undisputed that, when Timothy began working for the Dougherty Regional Fire Authority in 1989, his employer was a CalPERS agencythat provided its employees the option to purchase military service credit. However, section 21024, subdivision (e) specifically provides that the statute “shall apply to a memberonly if he or she elects to receive credit while he or she is in state service in the employment ofone employer on or after the date of the employer’s election to be subject to this section.” (Italics added.) In other words, a member’s right to purchase credit is dependentonhis or her employer’s election to be subject to section 21024. Presumably the employer could elect at some point to no longer be subject to section 21024, in which case employees who hadservedin the military would have no right to purchase credit based on that service, let alone a property interest in CalPERScredit based onthat service. The modification does not change the appellate judgment. (Cal. Rules of Court, rule 8.264(c)(2).) Respondent’s petition for rehearing is denied. JUN - 6 2072 Ruvolo, PJ. by Trial Court: Trial Judge: Counsel for Appellant: Counsel for Respondent: Counsel for Amicus Curiae Northern California Chapter of the American Academy of Matrimonial Lawyers, upon the request ofthe First District Court of Appeal Contra Costa County Superior Court Honorable Charles B. Burch April Rose Sommer Tarkington, O’Neill, Barrack & Chong, Robert A. Roth Whiting, Fallon, Ross & Abel, Ann Fallon; Office of Barbara A. DiFranza, Barbara DiFranza, PROOFOF SERVICE I declare that I am a citizen of the United States, that I have attained the age of majority, and that I am not a party to this action. My business address is 2711 Alcatraz Avenue, Suite 3, Berkeley, CA 94705-2726. Iam familiar with this firm’s practice of collection and processing of correspondenceto be deposited for delivery via the U.S. Postal Service as well as other methods used for delivery of correspondence. On the below stated date, in the mannerindicated, I caused the within document(s) entitled: PETITION FOR REVIEW To be served on theparties or their attorneys of record in this action: [x] Via Mail: I cause each envelope (with postage affixed thereto) to be placed in the U.S. mail at Berkeley, California. [] Via Personal Service: J instructed each envelope to be hand-delivered via professional messengerserviceto the addresslisted below. [] Via Overnight Courier: I caused each envelope to be delivered via professional overnight delivery service. {] Via Facsimile: I instructed such to be transmitted via facsimile to the office(s) of the addressee(s). addressed as follows April Rose Sommer Attorney at Law P.O. Box 6937 Moraga, CA 94570 Contra Costa County Superior Court P.O. Box 91] Martinez, CA 94553 California Court of Appeal - First District, Division Four 350 McAllister Street San Francisco, CA 94102 Diana E. Richmond Sideman & Bancroft | Embarcadero Center - 8th Floor San Francisco, CA 94111-3607 Barbara A. DiFranza 5366 Ventana Parkway Reno, NV 89511-5642 R. Ann Fallon Whiting, Fallon Ross & Abel LLP 101 Ygnacio Valley Road Suite 250 Walnut Creek, CA 94596 I declare under penalty of perjury under the laws of the United States and the State of California that the foregoingis true and correct. Date: June 25, 2012 /P p fis Ny Abret € — peNS Robert A. Roth